Under invoicing of imports to Pakistan is a major problem according to an official report that also looked at the problem in terms of different payment methods.

The report prepared on behalf of Pakistani customs officials found the worst cases of under-invoicing in high value imports. Items such as televisions, vacuum cleaners and video recorders were invoiced for as little as 15 per cent of their wholesale value on open markets.

The 36 types of imports surveyed between July last year and February 2002 were under invoiced by an average 37 per cent according to the report prepared by a team headed by tax expert, Shahzad Alam. The report reckoned the total cost in terms of lost tax and duty payments amounted to about US$99 million.

The report says that levels of under-invoicing in letter of credit transactions were lower than in open account or prepayment transactions. It also notes that under-invoicing was most prevalent in imports from the UK, Italy, Spain, China, Singapore, Indonesia, Malaysia, Thailand, the United Arab Emirates, Hong Kong and Taiwan.

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